Risk Journal By The Numbers

Rising technology risks, mounting geopolitical tensions, and continuing environmental concerns undermine social stability globally, creating deep uncertainty in a world little prepared to confront the challenges. This is why, for the past decade, our parent company, Marsh & McLennan Companies, together with the World Economic Forum (WEF) and other partners, has examined which risks pose the biggest threats to global economic development over the next decade in a report issued in conjunction with the annual WEF meeting in Davos, Switzerland. Read this year's report.

Emerging Risks

The Global Risks 2014 report highlights the need for coordinated action between different countries and sectors to mitigate threats and avert potential crises. This imperative is strongly emphasized in a formal Recommendation on the Governance of Critical Risks...

Oliver Wyman’s 2011 report, The Financial Crisis of 2015: An Avoidable History, predicted a crisis centered on emerging market economies. As emerging market economies have now begun to slow, we look at what such a crisis might mean for the future of these developing nations. Will they be able to weather the storm and make strides toward becoming “developed economies?” Or will the next crisis...

Advances in electronic connectivity and data storage have made the exchange of large quantities of information, even over vast distances, cheaper and quicker than anyone could have imagined possible 30 years ago. The gains in efficiency to businesses and benefits to consumers have been extraordinary.

However, opportunities for crime have also expanded. The new informational openness o...

When confronted with an uncertain future, many executives often revert to past practices or closely follow their industry peers in an attempt to insulate their organizations from undue volatility. But for those who choose to take calculated risks, the uncertain nature of the current business environment presents a unique opportunity to improve their strategic position and financial performan...

Oil prices have quadrupled since 2001. But many of the world’s largest international oil companies have not kept pace. Instead, their operating cash flows have only doubled over the same period. And most of their stock market valuations have trailed even further behind, underperforming the broader stock market as a group by about 65 percent.

Confronted with tighter profit margins and greater risks, executives are under more pressure than ever to deliver higher returns from their business portfolios. In response, most companies are now weighing investments aimed at improving their performance. In the first half of this year alone, companies announced 19,932 mergers and acquisitions worth $1.8 trillion – the highest value since th...

Cyber risk, telematics, “digitalization,” and related buzzwords dominate discussions about the future of property and casualty insurance. These are important topics, but they are only the visible manifestation of a deeper and more fundamental threat: namely, that in this new world, today’s property and casualty insurers are becoming irrelevant to their customers.

Most retailers agree that sustainability will be a key competitive advantage in the future. Unfortunately, there is a wide gap between their ambitions and reality.

A growing mismatch between supply and demand could erode the profits of the entire food industry within four decades. Global demand for agricultural production is expected to grow by 70 percent by mid‑century and the global...

Rethinking Tactics

Manufacturers of planes and trains are experiencing ongoing delivery delay problems that have set the industry back by more than $20 billion over the past several years. On the aviation side, costs and delays have been the price for developing game-changing aircraft programs that will transform the economic profile of the airline industry. On the rail side, rail integrators (which turn compo...

Banks are in the business of assuming risk. If a bank overestimates the risk of its lending and other activities, it will over‑price or reject valuable opportunities. If it underestimates risk, unexpected losses could make it insolvent. The performance of a bank’s risk function is therefore critical to its fortunes.

The risk function assesses and monitors the risks taken, and gives ad...

Oil and gas firms are leaders when it comes to managing process safety risks. Now, they need to perfect the art of reducing variability in their operational performance. The front line for competition in the energy industry is shifting to determining the appropriate level at which operational risks should be mitigated, as energy companies embark on more complex new projects at one end of the...

A long history of incidents, ranging from rogue trading to IT breakdowns to mis‑selling of products and services, testifies to the dangers that lie beyond the intentional financial risk-taking inherent to the financial services business model. Financial services are not alone in being exposed to large, catastrophic operational risks. Other capital‑intensive industries, such as energy, aviati...

Bad debt management is a key driver of financial performance for telecom and cable operators. But it also presents a major challenge, with the risk and cost of nonpayment needing to be balanced against opportunity costs. Bad debt management techniques have a far-reaching influence. They impact much more than the control of nonrecoverable income and fraud, and should be an integral part of op...

Company reputations are in the spotlight more than ever before. Every month another major corporate mishap hits the news and sets off a complex chain of repercussions. An industrial accident. A revelation of unethical or criminal practices. A product recall. An extended service outage. Recent years have witnessed an explosion of social media commentary, strong interventions by regulators, an...

Redefining Industries

During the last financial crisis, many financial institutions and regulators were found to be flying blind, with little idea of the size or even the real location of their risk exposures. And even now many financial institutions still lack reliable and comprehensive data about the risks they face.

Since 2011, oil prices have traded in a narrow band of around $100 per barrel in spite of a series of disruptions that in another era would have triggered significant price spikes. In Libya, rebels took over the government of the fifth-largest holder of proved oil reserves in the world. An anti‑government uprising in Syria shut off more than one-twentieth of global oil production. South Suda...

Asia has become much richer, not only absolutely, but relatively, too. Over the past 10 years, its share of global gross domestic product has increased from 24 percent to 31 percent. Its vast population is increasingly urban and middle‑class.

This growth has been achieved by following an “old economy” industrial and export‑driven model. Because this model depends on low wages and the ...

Over the past 15 years, the Internet has transformed the way consumers buy everything from books to music to insurance to travel. Giants such as Amazon and Google promise a future filled with instant-access information, interactive eyewear, and drone delivery of our groceries.

But another change is afoot that threatens wholesale distribution business models as more procurement profess...

Responding to the changing environment is not only about digital capabilities. It is about understanding what customers want and need, and then delivering it better and faster than your competitors. Here are six recommendations for how your company can come up with a credible plan to stay ahead of the shifting landscape in wholesale distribution.